Oreja’s think-tank of film and television industry experts is expected to support the idea when it unveils a final report on European audio-visual policy in the digital age in the autumn.

But the Commissioner fears that the proposed scheme will face the same member state apathy which killed plans for a guarantee fund for cinema production to be run by the European Investment Fund. A rearguard of reluctant spenders led by Germany forced successive EU presidencies to cut the budget for that initiative from 100 to 60 million ecu, before finally killing it late last year.

The new bank proposal, the brainchild of PolyGram Filmed Entertainment president Michael Kuhn, mimics a successful system already used in the US by Hollywood studios such as Fox and Universal. It would require EU funding to the tune of 20 million ecu, with the rest coming from banks.

Oreja’s spokesman said that the European Commission supported the bank securitisation scheme and would give member states more details about it at an autumn meeting of EU culture ministers. But he admitted that the Commissioner was “not very optimistic that it is going to work as a European mechanism”, adding: “We were very warm towards the guarantee fund, but in the end we had a bad experience when member states failed to support it.”

Under the scheme, a group of up to five EU film companies would present ‘slates’ of some ten films with international marketing potential over a three-year period.

The EU would provide the necessary share capital to leverage a further 480 million ecu from banks to create a 500 million ecu fund, which would be secured by insurance firms.

This money would then be distributed to the five companies or consortia, which would develop and distribute the films on condition that they paid 60% of the production costs from their own pockets.

The end result would be a total contribution to the Union’s film industry of 800 million ecu from an EU cash injection of just 20 million ecu.

While Oreja is pessimistic about the bank scheme’s chances, he sees scope for development of other projects to boost distribution and production when the Commission finishes a mid-term review of its Media II programme before the end of 1998.

This could include widening the scope of ‘automatic’ subsidy schemes to channel funds to companies distributing films outside their home territory. New proposals may also cover video and television films.